Market Remarks

Morning Notes – Thursday, October 12, 2023

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed at 9:00 AM – moving down since 8:00 AM after the release of the CPI data; down more than 20 points from the high of 4430.50
  • The odds are for a down day with a good chance of a sideways to down move from the pre-open level around 4410.00 – watch for a break above 4430.50 for a change of sentiments
  • The major economic data reports due during the day:
    • CPI ( 0.4% vs. 0.3% est.; prev. 0.6%) at 8:30 AM
    • Core CPI (0.3% vs. 0.3% est.; prev. 0.3%) at 8:30 AM
    • Unemployment Claims ( 209K vs. 211K est.; prev. 209K) at 8:30 AM
  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for the S&P 500 are 4345.34, 4329.15, and 4312.48
  • Critical resistance levels for the S&P 500 are 4385.46, 4401.38, and 4425.95
  • The key levels for E-mini futures are 4430.50, the high at 8:00 AM, and 4407.75, the low at 8:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2023) closed at 4408.75, and the index closed at 4376.95 – a spread of about +31.75 points; the futures closed at 4409.75; the fair value is -1.0
  • Pre-NYSE session open, futures were mixed – at 9:00 AM, S&P 500 futures were up by +2.25, Dow up by +34, and NASDAQ down by -2.50

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai was down
  • European markets are mostly higher – France and Switzerland are lower
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Dollar index
  • USD/JPY
  • USD/CHF
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are lower
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.616, down -1.2 basis points from two weeks ago;
    • The 30-year is at 4.746%, up +1.4 basis points
    • The 2-year yield is at 5.003%, down -13.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.387, up from -0.516
    • The 30-Year-&-10-Year spread is at 0.130, up from +0.106
  • VIX
    • At 15.97 @ 9:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 20.88 on October 4; low = 15.83 on September 129
    • Sentiment: Risk-Off

The trend and patterns in various time frames for the S&P 500:

Weekly:
  • The week ending on October 6 was a relatively small green candle with a small upper shadow and a lower shadow more than twice the size of the real body. The index is just below a resistance, which was acting as a support before September 22.
    • Stochastic (9,1, 3): %K crossed above the %D;
    • RSI-9 has turned up above 40
  • The week was up +20.45 or +0.6%; the 5-week ATR  is 101.50
  • First up week in the last five weeks and third in the previous ten weeks;
  • The weekly pivot point=4283.02, R1=4349.58, R2=4390.67; S1=4241.93, S2=4175.37; S1 pivot level was breached
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A small green candle with almost no upper shadow and a lower shadow bigger than the real body. On Monday, the index followed through after Friday’s one-day reversal candle at a support level – a junction of the uptrend line since October 13, 2022, and the lows of June 1, 2023.
  • Gapped down on September 21 and broke below a symmetrical triangle – the 61.8% extension target near 4250.00 is achieved; the 100% extension target is around 4150.00.
    • Stochastic (9, 1, 3): %K turned down above the %D
    • RSI-9 is above 56, above 8-DMA;
  • Above 20-day EMA; below 50-day EMA and 100-day SMA; above 200-day SMA;
  • Uptrend Confirmed
2-Hour (E-mini futures)
  • Broke a resistance level around 4370.00 on October 10, breaking the sequence of lower highs and lower lows since September 15.
  • The chart action since early June shows an uneven Head-and-Shoulder pattern. The neckline was broken on September 25, but the move above 4400.00 nullifies the pattern.
    • RSI-21 is around 55
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Moving sideways to up since 4:00 PM on Wednesday
  • RSI-21 has declined to around 40 after moving around 65
    • Below EMA20, but EMA10 of EMA50
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving sideways to down since 8:00 AM.
  • The Bollinger Band has been expanding since 8:00 AM, with the price walking down the lower bands.
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly higher on Wednesday, October 11, in mostly lower volume. Russell 2000 closed down, and the Dow Jones Industrial Average traded in higher volume.

The indices opened higher but moved lower early afternoon when they turned around and traded higher until the close. Dow Jones Transportation Average broke above the downtrend line from July 31, 2023.

All but three S&P sectors – Consumer Staples, Energy, and Healthcare – closed higher. The dollar index closed up, the energy futures were down, the precious metals were up, and hard and soft commodities closed mixed.

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